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ARTICLE · 11 JUNE 2020

Protection For Suppliers

Miller Thomson
Miller Thomson
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When a company files for protection from its creditors, a supplier to that company who has not been paid may understandably not wish to continue to supply to the company.

CanadaInsolvency/Bankruptcy/Re-Structuring
Gordon Plottel
Gordon Plottel
Steven Evans
Steven Evans
Kenneth R. Rosenstein
Kenneth R. Rosenstein
Aliza Premji
Aliza Premji
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The BC Supreme Court's decision in Soccer Express Trading Corp. (Re), 2020 BCSC 749 shows some possible protections for critical suppliers under the CCAA

When a company files for protection from its creditors, a supplier to that company who has not been paid may understandably not wish to continue to supply to the company. However the company may argue that it depends on the supplier in order to stay in business and a cut off of supply would cause irreparable harm and would sink any prospect of a successful restructuring. In these circumstances, under the Companies' Creditors Arrangement Act, R.S.C. 1985, c. C-36 (the "CCAA"), a court may declare the supplier to be a "critical supplier" and order it to continue to supply the company. However, it may also provide protection for such a supplier.

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